How Largest Aid Giver Uses Carrots, Not Sticks

THE Japanese government is about to reward the generals who rule Burma for releasing opposition leader Aung San Suu Kyi from six years of house arrest last July.

Many countries, and Ms. Suu Kyi herself, have reserved judgment on her release, saying they want to wait and see whether the regime includes the Nobel prize-winning democracy campaigner in the dialogue she demands.

But later this month Japan's Cabinet is expected to approve a $16.25 million grant to fund repairs to a nursing school in Rangoon, Burma's capital. The decision is emblematic of a growing Japanese willingness to use its aid budget for political purposes and to pursue its own brand of diplomacy, particularly in Asia.

"We'd like to express our appreciation" for the release, said a Japanese diplomat in a recent interview in Rangoon.

The Burmese case is not the only instance where Japan is using its vast foreign-aid budget - it is the world's largest donor - for political or geopolitical ends. The approach is already causing internal controversy.

In one example, the government decided in August to cut most of the grant aid it gives China in order to protest its nuclear-testing program. Tokyo did not reduce the much larger amount of low-interest loans it provides China, but an official in Beijing called the move "highly detrimental" to Sino-Japanese relations.

The decision came at the insistence of legislators in Japan's coalition government, who disregarded the objections of many Foreign Ministry bureaucrats, according to a ministry official in Tokyo who spoke on condition of anonymity. The ministry is said to be more interested in preserving friendly ties than in protesting nuclear weapons. Japan is China's largest trading partner.

The new Japanese aid to Burma, also known as Myanmar, however, is part of a policy that bureaucrats themselves have devised. The Japanese diplomat in Rangoon, for instance, criticizes the hard-line approach that many Western governments have taken toward Burma. "Only applying pressure is not working," he says.

Kei Nemoto, a scholar of modern Burma at the Tokyo University of Foreign Studies, says three factors drive Japan's stance of "soft persuasion" toward the Burmese junta that took over in 1988 after crushing massive pro-democracy demonstrations.

The first is the desire to counter Chinese influence in Burma, which Japan has long considered one of closest partners in Southeast Asia. Many Asian analysts see China, with its burgeoning economy and expanding military, as a potential source of instability and even aggression.

Mr. Nemoto adds that Burma's recent economic growth has made Japan more confident of its policy, since Japanese diplomats argue that the quickest route to democratization is economic development. Japanese companies have also shown increasing interest in investing in Burma.

Finally, he says, "Burma has become one of the few countries where Japan can exercise independent diplomacy, free from the influence of the US, since America's rigid human-rights-oriented position toward Burma has not brought fruitful results." Along with many other countries, the US halted assistance to the Burmese government after the pro-democracy campaign led by Suu Kyi was suppressed.

At the time, Japan also announced a cut in aid, but within a year said it would resume previously funded projects "gradually ... and cautiously." These days Burma does not receive much bilateral assistance - but Japan provides almost 90 percent of it.

Japan's diplomats claim their policy is working. Another Foreign Ministry official, who works on Burma, describes a decision this March to provide $10 million in agricultural assistance as a "carrot" that may have encouraged the release of Suu Kyi. Indeed, Japan's embassy in Rangoon was the first to hear of her release on July 10.

Within hours, Japanese officials in Tokyo announced they would consider the resumption of full-scale aid, a step that Suu Kyi has criticized as being too hasty.

But Nemoto counters that Japan needs to be more cautious if it intends to encourage democratic reforms in Burma and argues the current policy is more aimed at promoting economic growth. "The Japanese government only uses carrots," he says of the aid strategy. "They don't use any sticks."